National takes aim at house prices

The National Party is about to tackle the Government over the rocketing price of housing, and is spending $10,000 on an overseas study of methods to solve the problem it is creating.

National's housing spokesman, Phil Heatley, is going to the United States and Britain to study ways of resolving the predicament of steeply rising house prices blocking many people from owning a home.

"This is an inter-generational issue because grandparents and parents worry about how the next generation can afford a house," Mr Heatley said.

The average home now costs about seven times the average annual income.

This puts mortgages out of the reach of the modestly paid and means many will pay rent for years while they struggle to save enough for the deposit on a house.

A Massey University study this week showed houses were at their least affordable in 18 years, and were at a level last seen when interest rates were as high as 15.5 per cent.

Home affordability has declined each quarter over the past 4 years, the study showed.

Mr Heatley favours re-zoning more rural land for urban development, saying tight land supply was one of the factors which had driven up prices.

The issue has big political mileage, he said.

"This will be a huge election issue next year," Mr Heatley said. "National supports New Zealanders' home ownership ambitions, but tragically we are now seeing the first generation of young people locked out of home ownership as a matter of course."

He is visiting Houston, Dallas and Washington DC, then going to the International Housing Conference in London to hear speakers talk about how to solve urban sprawl, deal with planning issues and end the divide between rural and urban areas.

Experts from the Royal Bank of Scotland, Oxford University, Australia's Institute of Public Affairs and other organisations are speaking at the conference, being held in London during May.

"I want to nail down the details of the argument about affordability because the argument is that councils are not freeing enough land to meet demand," Mr Heatley said.

"Although freeing land is not necessarily a silver bullet, I want to visit places like Houston, which has no urban limits," he said.

The trip will cost about $10,000, which will come from the taxpayer-funded leader's budget which provides money for policy development.

Mr Heatley said his trip - and the amount his party was spending on it - was a sign of the importance National placed on the housing affordability issue.

Housing Minister Chris Carter told the Affordable Housing Forum in Wellington late last year that the Government had identified three new ways of solving the crisis - new uses of planning rules, special sector partnerships and Government-led development projects on surplus Crown land. None had become policy yet but they were being investigated.

"People of my generation are deeply disturbed by the enormous difficulties our children face in getting into the housing market, and housing affordability is an issue preoccupying hundreds of thousands of young households around the country," Mr Carter said.

"This will only intensify if the current swollen house prices bed in."

But Mr Carter said land supply was not the core problem.

"The problem with supply is not that we haven't been releasing land for development as those who want to gut the Resource Management Act are fond of claiming," he told the conference. Instead, the wrong type of housing was being built.

"The evidence coming in from research projects shows pretty clearly we have not been building affordable housing.

"Whether its because of flaws in zoning policy or the costs for developers of gathering and holding large plots of land, homes have been built for further up the market."

Why so steep?

National says housing is too expensive because:
* Land supply is not keeping pace with demand.
* Councils are being too restrictive in releasing land.
* Land values are skyrocketing because of scarce supply.
* Developers are "landbanking" and strangling supply.
* More urban and provincial housing subdivisions are needed.